Business; Economists Duel (in Print) on Taxes

By DANIEL ALTMAN

Published: February 16, 2003

WHAT do you get when you combine 10 winners of the Nobel in economic science, two former chairwomen of the Clinton administration's Council of Economic Advisers, the president of the American Economic Association and about 450 other economists?

If you add the Economic Policy Institute, a research group based in Washington, you get a full-page advertisement in The New York Times last Tuesday disparaging the White House's latest plan to cut taxes.

On the same day, the National Taxpayers Union rereleased its open letter in support of the tax cuts, which has been signed by 115 economists, including three Nobel winners.

A day later, the White House released a list of 250 economists who support the president's tax-cut package. It includes many of the same names as in the taxpayers union's letter, but just one of the Nobel laureates.

Peter J. Sepp, a spokesman for the taxpayers union, said his group's decision to rerelease its letter was definitely in response to the ad, to show ''that there is another, a different chorus of voices singing from a different songbook'' about economic policy.

So, does either side win? As any self-respecting economist would say, you have to look at the data.

Alan S. Blinder, a professor at Princeton who was vice chairman of the Federal Reserve Board and a member of President Bill Clinton's Council of Economic Advisers, cautioned against taking either set of supporters too seriously.

''What you tend to get is dueling lists: who can get more on their side, or more prestigious lists, or whatever,'' he said. ''It's not scientific polling.''

He had seen the statement in the ad but did not sign. In part, he said, ''I wasn't that eager to get in the middle of a mud-wrestling contest.''

Lawrence R. Mishel, the president of the Economic Policy Institute, put the ad together in a week, using a simple and time-tested process: he drafted a statement, brought a few celebrated economists on board, solicited responses from a long list of others and hoped that word of mouth would do the rest.

His early signers included George A. Akerlof, who shared a Nobel in 2001, and Janet L. Yellen, chairwoman of the Council of Economic Advisers from 1997 to 1999 and a governor of the Federal Reserve before that. Mr. Akerlof and Ms. Yellen happen to be married to each other and are professors at the University of California at Berkeley.

With their help, more than 20 other Berkeley economists signed, including Daniel L. McFadden, who shared the Nobel in 2000. Leading experts in virtually all fields of economics, and from most top university departments, also signed the ad opposing cuts.

Mr. Mishel said he was surprised by the heartfelt nature of the responses. One Nobel laureate, Franco Modigliani, 84, of the Massachusetts Institute of Technology, insisted on traveling from Cambridge, Mass., to Washington for a news conference on Monday despite his frail health.

''His wife didn't want him to come; his doctors didn't want him to come,'' Mr. Mishel recalled. ''He came in using a cane.''

Perhaps not surprisingly, a bevy of well-known economists from left-wing policy groups also signed the institute's ad. The White House's list included several distinguished conservatives. Yet the five Nobel-winning economists currently teaching at the University of Chicago, famous for its pro-market bent, were all missing.

More responses to the institute's ad may be on the way, though. William W. Beach, the director of the Center for Data Analysis at the Heritage Foundation, which has championed tax cuts, said the ad had energized his economic modeling staff.

''Much of the work we've been doing now, and in the past couple of weeks, could be a response,'' Mr. Beach said. ''We'll try to organize it in such as way that it goes to some of the points that were made in the ad.''

Mr. Sepp added: ''There's not a monolithic consensus of opinion against the elements of the Bush plan, and especially on the overall issue of how tax reductions should be implemented.''

The battle of the brains has just begun.

Photo: When a group of economists opposed the Bush tax plan in this ad last week, another group supporting the cuts reissued its message.